If business inventories equal $40 billion at the beginning of the year and equal $55 billion at the end of the year,then GDP has
A) decreased by $15 billion.
B) increased by $15 billion.
C) increased by $40 billion.
D) increased by $55 billion.
E) not changed.

Question

Quizplus · Accepted Answer

An increase in business inventories from $40 billion to $55 billion indicates that production has exceeded sales by $15 billion, contributing to an increase in GDP by that amount.

If Business Inventories Equal $40 Billion at the Beginning of the Year